Abu Dhabi/Dubai: Dubai-based Arabtec Holding yesterday pulled out of a proposed $1.74 billion (Dh6.38 billion) takeover by Aabar Investments but kept the door open to a future "strategic partnership" in Abu Dhabi.
Analysts told Gulf News Arabtec no longer required the cash infusion from Aabar which sought to buy 70 per cent of Arabtec's shares. Arabtec said it will benefit from the Dubai World restructuring proposal.
"The parties have agreed that they will no longer pursue the original trasaction and will terminate the acquisition documents," Arabtec and Aabar said in a joint statement.
"The parties have agreed that they will continue to work together in good faith towards future cooperation and forming a strategic partnership in Abu Dhabi in the future."
Aabar said in January it had agreed to acquire 70 per cent of Arabtec for $1.74 billion (Dh6.4 billion) through the purchase of convertible bonds. The deal awaited the completion of due diligence.
The sale would have secured the much-needed financing for Arabtec to continue its projects in the UAE, Qatar, Saudi Arabia and other markets.
"The deal was going to be highly diluting for investors in Arabtec," said Rami Sidani, head of Middle East investments at Schroders.
"At the time Arabtec did not have a choice if they wanted to pursue their expansion plan. Today they are in a better financial position and the company can negotiate a better deal for shareholders," Sidani said.
"They will be collecting their money from Nakheel. We don't know how much they are owed, but we know it's significant."
Last month's Dubai World restructuring proposal guarantees that money owed to developer Nakheel's contractors will be paid.
Arabtec has said it is owed Dh4.6 billion by its customers, but gave no specific figure for Nakheel. The company is owed Dh2.5 billion in late payments, Arabtec chief financial officer Ziadi Makhzoumi said in a televised interview in early March.
Some analysts perceive the cancellation as a blow to Arabtec. The market, however, disagrees. News of the cancellation sent Arabtec stock up by more than 2.3 per cent to Dh2.71 in Dubai.
Aabar shares closed unchanged at Dh2.37 in Abu Dhabi. Arabtec shares have gained 25 per cent since the March 25 unveiling of the Dubai World proposal.